UK - Schemes are set to clash with supermarket giant Tesco over its poor corporate governance record at its upcoming annual general meeting.
The supermarket chain will come under fire for employing executives on two-year rolling contracts and recent changes to its bonus scheme which would entitle a departing director to a maximum five times their salary on termination of contract.
A Pensions Investment Research Consultants spokesman said both concerns are against corporate governance best practice guidelines.
He said: “While PIRC supports performance-related pay, these bonus increases are accompanied by rises in salary which adds to the multiplier effect.
“Tesco already had one of the UK’s highest paid boards.”
Tesco has increased the maximum bonuses under its executive incentive scheme from 75% of salary to 150% of salary – this year 140% was actually paid.
Also, if directors hold their bonus shares for two years, they then receive a further 37.5% of salary on top, which is a 12.5% increase from last year.
Earlier this year, Tesco flouted the recommendations of the Higgs report by naming a long-standing board member as its new chairman.
But the NAPF defended the firm’s actions, saying the key element of the Higgs guidelines is “comply or explain”, which it said Tesco had done.
The Tesco annual general meeting will take place a month after the GlaxoSmithKline meeting that saw shareholders successfully block the company’s remuneration report because of concerns over the pay of chief executive Jean-Pierre Garnier. It also follows last week’s shareholder defeat at HSBC when a record US$57m pay package for bank boss William Aldinger was passed.
Tesco’s AGM is to be held on June 13.
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